When price moves very fast in one direction, it can leave behind a zone where barely any trading took place. On the chart, this shows up as a gap between candles. Traders call it a fair value gap, or FVG.
How to find one
- 1Find a strong move: one large candle in the middle of three.
- 2For a bullish FVG, look at the high of the first candle and the low of the third candle.
- 3If the third candle's low is above the first candle's high, the space between them is the gap.
- 4For a bearish FVG, it's the reverse: the third candle's high is below the first candle's low.
Why traders use FVGs for entries
Price often comes back into these gaps before continuing. Instead of chasing a move, you place a pending order inside the gap — many traders use the middle of it — with a stop beyond the swing that created the move. That gives a clear entry, a clear stop, and a defined risk.
When an FVG is worth more
- It forms during the move that breaks structure, right after a liquidity sweep.
- It points in the same direction as the higher-timeframe trend.
- Price hasn't already come back and filled it.
Not every gap gets filled, and not every filled gap holds. If price never returns to your entry, you simply don't trade — that's fine.